Barilla Spa (A) Case Study Solution
The proposal to supply distributors with quantities chosen by Barilla instead of the distributors placing the order is to help endcustomers meet their demands effectively and the workloaddistributed evenly in the factory and the logistics department if this system is implemented themanufacturing and the logistics will not be under pressure to meet a particular order.The JITD system has some disadvantages as well, it will be quite difficult to carry outtrade promotions. Sales representatives lose their incentives as the sale becomes predictable. Thedistributors might hesitate at times to share their sales data, which is quite crucial for thecompany to dispatch the products.
JITD if implemented should cover the entire company, the manager should make a proposal in such a way that if this system is implemented it would be for the best interest of the company. A view should be adopted that the relationship with the distributors is a one-time long term partnership and should be managed in a systematic manner by having multiple points of contact and sharing the necessary data to the supplier by the distributor to help improve the system.
One of the biggest concerns of being their customer of Barilla is byallowing them to control all the forecasting and supplying of products. The advantages outweighthe disadvantages in the system, the supplier and the distributor can work together in helpingeach other to make the system better and efficient.
Recommendation:
It is estimated that the average inventory level will reduce to 1422 billion lire Pasta as a result of implementing the Just in time Distribution system (JITD). The average inventory level has been estimated assuming the maximum inventory the organization will stock will be 1225 trillion Pasta which is based on the maximum demand of Pasta in Italy i.e. 3.5 trillion and the current market share of the organization is 35 percent therefore, it is assumed that the maximum stock the organization will be required to maintain will be equal to the maximum demand of it has to fulfill.
Furthermore, it is assumed that the maximum consumption rate of Pasta in the region will be 70 billion lire per day and the maximum reorder period in days will be 7. As the inventory level will be reduced, the carrying cost, holding cost and other costs associated with marinating excessive inventory will be reduced. (Shown in Appendix 1)..............................
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